Also in this playlist...
This transcript is automatically generated
Joining us now for more on the shake up at the White House a much much more Republican senator Judd Gregg of New Hampshire that's always great to see if there.
Thank you Cheryl thanks for me -- why I've ever -- ask you about that Peter Orszag if you don't mind you're you're actually on the president's fiscal.
Responsibility commission your reaction nativity resignation -- back.
Well not not all that as surprising as -- As your reporter said this a high burnout job OMB director you can honestly say no to people and you.
Don't win a lot of friends and administration any administration is OMB director.
Certainly Peter has worked hard.
The success -- having been there unfortunately in fact.
Since criticizing governor even enjoy the size of government exploded under this administration its first eighteen.
As a very practical matter Peter has been I think a fiscally responsible voice and he will be live -- -- -- to this administration in my opinion.
Okay all right fair enough well let's get the financial regulatory form you of course have been the voice in particular senator.
Let's talk about derivatives as they try to reconcile the senate and house versions of financial regulatory -- -- your fingers are definitely in all of -- I have to ask you.
Where are we with that have you had any progress in trying to tone down that language.
Well I think.
It's very destructive to our credit markets -- language which is in the senate bill.
You know derivatives are legitimate form of basically making credit more available to people and keeping their sort of the oil that makes the system -- Especially for commercial and users like large companies like caterpillar.
Or John Deere they need the derivatives markets -- are to be able to compete internationally.
And banks need them in order to be able to give their customers adequate access to capital and to credit.
So as a very practical matter we need a vibrant through the -- -- -- for the language in this bill will significantly shrink fret not my guess is -- -- credit.
As we go into the new year this bill passes by close -- a trillion dollars and and that's gonna have a very significant dampening effect on our economy and it's going to occur.
Because if you spin off the swap desk.
Do you ratchet down on the ability UN user exemptions you're gonna end up -- significantly less credit being available.
To the economy generally and that's not good.
You can have very sound derivatives market you can have adequate transparency act -- adequate capital margins.
Without doing this sort of draconian action that's occurring in this bill.
Senator if I can just -- been asked a question -- why don't we make a distinguish it between.
Regular derivatives and credit default swaps which her you know what -- the most destructive -- -- financial instruments.
Well credit default swaps also serve a legitimate purpose in many areas I mean basically like credit default swap -- -- -- Is it saying you're gonna get protection insurance.
Over the person you're doing business with -- make sure that person doesn't -- -- the country that that person is with.
Working out of doesn't feel for example if -- doing business today we have.
Let's say Spain or maybe Portugal or Italy even.
If I want to -- some -- credit default swaps to protect you from those countries sovereign debts having.
A significant impact on the company you're doing business within that -- -- credit default must have some legitimate purposes right if you make -- mad if you make them transparent.
And you make them subject to clearing -- activity so they have adequate capital behind -- -- -- behind them.
Then you make those.
Be strong and financially viable then you get past the issue of having naked swaps and situation we don't have anything behind credit.
Right and that's specifically when I was talking about the folks who goal only the short -- no longer pats didn't.
Again it's a good bit the likelihood of taking insurance out on someone else's home and I don't think -- want that.
Well you know for every person is short there's somebody as long so this is to some degree a zero sum game now in a situation where you've got I.
Something like Greece where you know that.
You we know they're usually get -- can't be paid.
People are gonna take a short position in the because they recognize -- that that's gonna fail now the the fact that the country is not being responsible and putting a lot of -- on its books doesn't mean that people shouldn't be able to -- against it.
So I think the key here is to make them transparent pushes many of them as we can on the clearing houses and onto exchanges.
But let's not set up a system where we basically contracted business.
Arbitrarily and move a large amount of the business overseas.
Which causes American companies be less competitive -- -- How are you with with the language regarding capital requirements for banks -- Barney Frank his decision making a statement saying that -- -- he's confident that.
Work on this -- gonna be -- -- completed by Thursday things are going well in his opinion the capital requirements something else.
You've been pretty vocal about where are you -- -- Well.
Again and you've got to be careful what you do here because what you may end up when there's an unnecessary contraction in the hillbilly credit remembers you forced banks to increase their capital.
They basically have to get that somewhere usually get it from good loans not from bad loans is bad loans are -- paying.
So you've got to make sure you do it rationally now this idea that trust preferred stock should not be counted as part of the capital of -- bank.
Is going to have a huge impact on mid -- banks and you're gonna see a lot of midsize banks forced into a situation where they're gonna have to contracted significantly in their lending activities.
In a very arbitrary and inappropriate way.
So I think -- -- -- -- this more logically yes there needs to be strong capital in the system that is critical to having a strong system.
But you probably should leave that to the regulations side not arbitrarily do it through legislative language I want.
Filter by section